Newt Gingrich's attack on Mitt Romney's business career is one for the textbooks. His statements are finely calibrated to stain one of Romney's strongest selling points without accidentally raising the more relevant and dangerous question -- what policies have made private equity the most powerful force in modern American business.
The substance of Newt's attack is that Romney was a sort of corporate pirate who made a living buying up businesses and selling them off as scrap. The record shows that Bain was a far more creative force than the average private equity firm. It even engaged occasionally in the kind of risky venture capital investment that does the most to stimulate job growth. Sean Hazlett at Reflections of a Rational Republican has a great summary of what private equity is and why it matters.
The misleading nature of the attack is not what makes it dangerous for Gingrich. This play threatens to open conservative minds to the heretical possibility that government policies favored by free market zealots over the past generation have played a role in our economic mess.
Gingrich has so far steered clear of overtly questioning the carried interest rule, the spectacularly lopsided treatment of capital gains and dividends, or the dismantling of basic shareholder protections that have paved the way for the private equity boom. Somehow he has managed to structure an attack that makes it seem like Mitt Romney, the only remaining Republican candidate who hasn't served in the Federal government, is personally responsible for the fact that he is only taxed at a 15 percent rate.
Are Gingrich's attacks actually working? Do Republicans care about Romney's private equity career? Is it really possible to blame Mitt Romney for operating a fantastically successful private equity fund without feeling any unease about government policies that encourage leveraged buyouts? If Gingrich was willing to talk about how tax policy and corporate law could be restructured to address the worst side-effects of private equity, there would be some merit to his attack. He would have a valuable potential role to play in reviving American capitalism.
And he would probably still be losing.